Three years have flown by, and it’s time to evaluate the accuracy of my predictions from 2021. I will start with Singapore stocks and follow up with a post on US stocks.
Fortunately, I am not a buy and forget type of investors. Rather, I actively monitored their quarterly/half-yearly reports and made adjustment to my portfolio accordingly. As such, the return I obtained for the above counters should be better.
Here’s a look at what I thought would happen versus what actually happened.
AEM Holdings (SGX: AWX): Latest quarter guidance shows that the group will continue to ramp up in 2022. With the plan to expand beyond Intel and already making headway with a few customers, the outlook looks bright! I expect both top/bottom line to continue to grow. If on average, it grows at about 20%-25%, I expect the price to hit at least $9.
Not only did the ramp up not occur, the order from Intel Corporation (NADAQ: INTC) plummeted. Combined with the missteps made, the company sank into loss in FY2023.
The glimmer of hope comes from the order of new customers which should see them become profitable again.
I was fortunate to sold my previous holdings with a small profit. Current holdings were bought in batches this year at an average price of S$1.80.
DBS Group Holdings (SGX: D05): With less uncertainties from the pandemic and upcoming rate hike, DBS should continue to grow at a steady pace. Dividend should grow at a steady pace too. On average if DPU grows by 5% annually, DPU in 2024 will be around $1.50. At a yield of around 3.5%, share price should hit $42.
The rate hikes were quicker and larger than expected. It benefitted the banks and dividends was a high at S$2.11 for 2024, not forgetting the 1-for-10 bonus share.
One of my best decisions made this year was to buy back and accumulate DBS shares.
iFAST Corporation (SGX: AIY): Continued growth in all markets with eMPF project providing the main growth. I did some predication in this post and EPS in 2024 should hit 25 cents. Assuming a PE of 60x as EPS will jump in 2025, price should hit at least $15.
Hit by the downturn in 2022, iFAST’s share price has not been able to break the previous high recorded in 2021, even as its business recovered over the past two years.
With the company exceeding its own eMPF projection for 2023 and 2024, and iFAST Global Bank (iBG) on track to break even soon, earnings per share (EPS) would be north of S$0.20 for FY 2024.
However, the market is unlikely to value iFAST at such high PE until the company proves that iBG is its next growth driver.
Besides selling at a portfolio level to fund my future expenses, I have held on to my holdings since end 2021. I remain confident of iFAST’s long-term growth prospect.
Micro-Mechanics (Holdings) (SGX: 5DD): Riding on the tailwind of semiconductors demand for the next few years, Micro-Mechanics should be able to grow its revenue and net profit on average by 10% annually. With that, DPU should hit 17 cents by 2024. At a yield of around 4%, price would be around $4.3.
The inventory piled up in 2021 resulted in a significant drop in demand from late 2022. Sales, net income, cash flow plunged and dividends reduced accordingly.
2025 could be the turnaround year if they can maintain their 1Q 2025 momentum.
I partially divested my holdings in May 2023 after the weaker outlook shared by the management. I will hold on to the remaining stake to participate in its recovery.
Oversea-Chinese Banking Corporation (SGX: O39): Another bank that should continue to do well in the next few years. Its Greater China growth is something to look at since that’s the forte of the new CEO. DPU should raise accordingly to $0.50 by 2024. At a yield of around 3.5%, price would be $14.
New CEO did not disappoint. With a clearer dividend policy of paying out 50% of earnings and tailwind from the rate hikes, the company has paid out S$0.86 dividend for 2024.
It’s intriguing to note that I was content with a 3.5% yield in the past. However, given the current high interest rate environment, where Singapore Savings Bonds and T-bills yield approximately 3%, my expectations for dividend yield have increased to a range of 5-6%.
I added more OCBC shares during the July 2023 sale. Given that it occupies more than 10% of portfolio, I decided that I have sufficient exposure to this Singapore bank.
Raffles Medical Group (SGX: BSL): RafflesChongqing should churn out profit by 2024 and RafflesShanghai should break even by then. Singapore business should stay stable and on average the group should be able to grow at 15% annually till 2024. With expectation of stronger earning going forward, it might be trading at PE 40x. So price will be around $2.1.
China hospitals are taking longer than expected time to breakeven. Without the support from Covid-19 services, revenue and net profit has declined since 2H 2023.
I fully divested my stake this July as I am significant less optimistic of its growth trajectory.
Singapore Exchange (SGX: S68): Continue to churn out free cash flow from its various business segments and hopefully DPU can grow to $0.38. At a yield of 3.5%, price would be around $11.
With its cash flow, SGX continues to dish out consistent dividends. Its dividends grew from S$0.32 in 2021 to S$0.345 in 2024.
I fully divested my stake this May as its dividend yield and growth rate pale as compared to others.
UMS Integration (SGX: 558): Similar to Micro-Mechanics, it is going to ride on the tailwind of semiconductors demand. JEP should also bring in some dough given the expected recovery in the next few years. DPU might hit $0.08 by 2024. At 4% yield, price would be around $2.
Similar to Micro-Mechanics, the tailwind turned into excess inventory headwind.
It lost its exclusivity to its key customer Applied Materials (NASDAQ: AMAT) last year but has since landed business with another key customer – a Nasdaq listed semiconductor equipment manufacturer. With robust demand from this new customer, UMS looks set to have a stronger 2025.
Regular readers might remember that I re-established a position in UMS recently.
Venture Corporation (SGX: V03): Supply chain issue should be settled by then and it should be able to grow on average at about 10%. DPU should be able to increase to $0.90 and at 4% yield, price would be $23.
While supply chain issues have eased, persistent weak demand has led to two consecutive years of revenue and profit decline. Despite these challenges, the company’s strong cash generation and robust balance sheet have enabled it to maintain dividend payments
As with the previous round, I am not surprised by the inaccuracy of my predictions. In 2021, it was impossible to foresee the global upheaval caused by the Ukraine war and the subsequent rapid rate hikes.
However, the stark difference between the two exercises lies in the average return. This time, it’s a mere -3%, a far cry from the previous whopping 122%!
Is my crystal ball getting old and fuzzy? Perhaps.
Nevertheless, the true value lies in the lessons learned.
Even over a three-year time span, resilient businesses (especially cyclical) can be significantly impacted by economic downturns. While I couldn’t anticipate these macroeconomic shifts, I need to stay open and adjust my strategy along the way.
Given the inherent uncertainty, diversification becomes crucial. While it may limit potential upside, it prioritises downside protection, a more prudent approach that suits me now.
Discover more from Towards Financial Independence
Subscribe to get the latest posts sent to your email.